Skilled labour and Reliable Infrastructure Prerequisites for the Industrial and Logistics Sector in Romania to Sustain Growth

The prosperity of a nation is never inherited, it needs to be created. In the era of globalization, the business world is undergoing complete catharsis at a very steady pace. The forces of the business are incredibly diverse and define the challenges that make it overbearing for the various sectors of the economy to redesign their modus operandi to tackle the changing requirements in order to create the needed balance and stability in the growth.

The industrial and logistics market has created history as it turned out to be the second largest growth driver of the Romanian Real estate market in the year 2017. As the Romanian industrial and logistics gross take-up improved by almost 15% to over 525,000 square meters. Approximately 350,000 sqm of new spaces were added to stock in 2017, manifesting a 13% increase over 2016. There is nearly 3 million sqm of space in the Romanian industrial and logistics market. TPG signing a 2.4 billion euro agreement to sell its logistics property firm P3 Logistics Parks to Singapore’s sovereign wealth fund GIC has been a landmark in Romania’s industrial and logistics in 2017.

As of last year, property investment volume for Romania is estimated at over €960 million, a value which is ca. 8% higher than the registered value of 2016 i.e., €890million. There has been a visible increase in the number of transactions with the average deal size of approximately €28.5 million. A progress in liquidity in the secondary cities as compared to the year 2016 is manifested by the statistics of Bucharest amounting to nearly 36% of the total investment by volume

The real transactions dominate the market volumes with a total of 43% followed by industrial, office and hotels accounted for over 22%, 17%, and 18% respectively.

Romania witnessed the first acquisition of the fund, buying shares in one of the largest retail owners in the country and the largest transaction of the year with the acquisition of 50% of Iulius Group’s retail and office portfolio by South African group Atterbury. The entrance on the office market of the investor/developer which was previously focused on retail projects was marked by the most notable office transaction, the acquisition by Immochan of Coresi Business Park in Brasov from Ascenta Management.

The acquisition of Logicor’s Romanian portfolio as part of a Pan-European transaction by China Investment Corporation from Blackstone for a value estimated at around €78 million making it the largest Industrial deal of 2017.

The sale represents the largest ever hotel transaction by deal volume in Romania and one of the largest recorded in Central & Eastern Europe (CEE) was the sale of the Radisson Hospitality Complex in Bucharest by Elbit to a joint venture between Revetas Capital and Cerberus Capital Management for 169 € million. Most of the demand came from logistics, transport and distribution companies, which leased a total of 290,000 sqm, or more than 55 percent of the total.

The retailers were also among the most active companies last year, with area contracted of over 110,000 sqm, 22 percent of the total volume rented in 2017.

Approximately 100,000 sqm have been leased for production activities, but it is worth to mention that these companies usually own the production facilities and hence the share of rentals of such spaces does not reflect the dynamics of this sector. One of the major positive component of the market almost 80 percent (430,000 sqm) of the total surface rented in 2017, represents net demand – new lease agreements, extensions, and pre-lettings, the rest being contracted renewals and relocations. Bucharest stands on the top of the preferences of the regional structure of demand with 275,000 sqm (53 percent of the total) followed by Timisoara – 76,200 sqm, followed by Pitesti – 50,000 sqm.

As the CEO of Moore Stephens KSC, Mamas Koutsoyiannis speaks his mind, he emphasizes on the transformations taking place in the industrial and logistics sector and how it gets influenced by shifting sands of regulatory frameworks in various jurisdictions, technological developments and the general economic health of the marketplace. He also highlights the role of Moore Stephens KSC in assisting the vast and elite clients from Industrial and logistics sector like Van Moer to name a few and mentions about Moore Stephens KSC’s proficiency and competence in mitigating financial, operational and regulatory risks arising from such a challenging environment.

With the above statistics and data, it is evident that the stability and growth of the Romanian economy are greatly driven by the growth driver- Industrial and Logistics Sector.

The growth of economy forms its basis on the boost provided to the Industrial and Logistics Sector which can be done by providing a reliable infrastructure and providing the skilled labour. Infrastructure is the basic need of any society. It doesn’t only remove the hurdles from the path of economic development but also cuts down on the additional time, effort and money. For a fast pace development engaging a specialized and highly trained workforce will not only save time but also increase the efficiency.

The market in several areas of the country like Bucharest, West and Center are still enwrapped. The market underwent developmental changes last year which underlines how the demand and supply of the market favor the locations that are already development poles. With this frame of reference, the instability in the market can be stabilized by strengthening infrastructure and efficiency of the labour. Thus in order to maintain uniform national growth in accordance with the Growth Pole theory and achieve the desired results the Industrial and Logistics sector of Romanian economy must be provided with a sound infrastructure and efficient labour.